Year 6 Issue 2 Jestha, 2069 May-June, 2012 Page 4

It is unfortunate as the four years

have lapsed and there is noconstitution. It is titanic

disappointment. The dissolutionof the Constituent Assembly (CA)

has disappointed the country’sprivate sector and worried that the demise of the CA may

further threaten business environment. Therefore, theConfederation of Nepalese Industries (CNI) has asked the

government to come up with a common minimumeconomic agenda to protect the industrial sector and

economy from the negative impact of the political crisis.

A huge sum of money—more than Rs 10 billions—has

been spent in the last four years in the name of CA. Itis well established that when uncertainty happens

there is confusion in investment and business whichprivate sector does not like. Hence, the current

scenario is a set back and gives wrong perceptionabout Nepal but the country is still a very attractive

destination for investment. The biggest problem rightnow is we have not been able to raise the confidence

of potential investors.

We want all the political parties to come and agree onthis common minimum economic agenda. They need to

understand that they are responsible to make sure thatNepal develops because they are giving hope of new

Nepal which is prosperous. If it is a prosperous Nepal,than economic agenda should be a common agenda

irrespective of ideology of political parties.

With CA election already been announced, many inprivate sector are worried about the donation drive of

political parties. The CNI has talked about setting limitfor the donation money. How strong is that fear and how

important is to set the limit of donation?

To cope with the current situation, first of all, budget

should come on time which is critical for all of us.Secondly, the government should be able to invest

capital expenditure in large scale projects. Rather thanspending money out for cheap popularity to get vote, we

need to look at energy which is a national crisis at themoment. Therefore the budget must focus on improving

the existing infrastructure and encourage private sectorby giving more incentives to create more employment.

Message

CNI helps fire victimsConfederation of Nepalese Industries

(CNI) distributed bamboo and corrugated

sheets worth Rs 1 million to the fire victims ofAurahi village development committee,

Siraha district so that they can quicklyconstruct their homes. CNI’s Koshi chapter

coordinator Basudev Golyan visited the siteand distributed the materials. CNI had

handed the essentials to the support

committee formed under the leadership ofchief district officer of Siraha which will

distribute the materials. The help wasarranged by Citizen Relief Fund jointly

established by CNI and Maha Sanchar, CNI’sfounding member Bishal Group, CNI’s youth

arm Youth Entrepreneurs Forum, RupandehiIndustry Association and national council

member of CNI Ramesh Gupta.

News Letter

Binod Kumar ChaudharyPresident, CNI

CNI Interaction with

Finance Ministerdelegation of Confederation ofNepalese Industries (CNI) held an

interaction with the finance ministerMr. Barsa Man Pun at Ministry of Finance

(MOF) on 30 May. The interaction was calledby the MOF to discuss with the private sector

in the changing political situation afterdissolution of Constitution Assembly (CA).

Addressing the program Mr. Pun said that thegovernment will be bringing the economy

related bills through ordinance to boost theprivate sector’s confidence. “These bills will

be brought through political consensus,” saidPun, adding that more than a dozen bills

related to the economy have been pendingat the dissolved parliament.

The CNI delegation demanded a commonunderstanding on economic agenda among

the political parties as the CA dissolution maythreaten business environment. “The

government needs to come up with acommon minimum economic agenda,” said

Hari Bhakta Sharma, actingpresident of CNI, adding that

the government shouldmaintain a single diesel price as

the dual fuel price mechanismhas hit industries hard. CNI also

asked the government toensure availability of electricity

through separate feeder forindustries employing more than

50 people. "If the governmentwants to attract the foreign

investors, the corporateincome tax should be reduced

on manufacturing and other industries to 10and 15 percent, respectively, from the current

20 and 25 percent," he added.CNI governing council member and

industrialist Mr. Bijay Shah asked thegovernment to allow Nepalis to invest

abroad. Responding to the requests, Punsaid the government was opening

outward investment but added the issuecalls for wider consultations with major

political parties. Acting president Sharmaalso urged the government to set up a

‘Technology Development Fund’ of up to Rs1 billion to facilitate research and

development which could also help inattracting foreign capital.

The Finance secretary Mr. KrishnahariBaskota, addressing the program, said the

macroeconomic indicators of the country arein comfortable position. "The private sector

needs not to be hesitated to invest morecapital in Nepal because the MOF is

considering to bring the bills related toSpecial Economic Zone, Banks and Financial

Institutions, Industrial Enterprise and threebills on anti-money laundering (AML)," said

Baskota. At the meeting, NICBank CEO Sashin Joshi said the

government should bring thethree bills related to AML ---

Mutual Legal Assistance,Organised Crime and

Extradition Treaty—throughordinance at the earliest as

further delay would be provecostly for banks and financial

institutions (BFIs).According to Joshi, the

government ’s disinclinationto offer corporate tax waiver

has discouraged BFI mergers the centralbank’s efforts. “There is need to give some

waiver in corporate tax to encouragemergers,” said Joshi.

Stating that banks’ liquidity position hasimproved, convener of CNI governing council

Mr. Chiranji Lal Agrawal asked thegovernment to reduce the Statutory

Liquidity Requirement (SLR) of banks from theexisting 20 percent to 15 percent. “It could

lower the interest rate which would boostinvestments in industries,” he said.

CNI alsoasked toensure

availability ofelectricity

throughseparate

feeder

A

INSIDE�

CNI and AEPC to WorkTogether

Private Sector’s Rally for Peaceand Harmony

Nepal Climbs Three Steps inDoing Business

2�

3�

4�

May-June, 2012

CNI ActivitiesMONITOR 2

CNI Pres's Book on Economy

A book entitled “Uddhyami Ka Aankha Ma Arthatantra” written by

Mr. Binod Kumar Chaudhary, president of Confederation of NepaleseIndustries (CNI), an apex body of Nepalese manufacturing and service

sector as well as Chaudhary Group, a leading business house of Nepal,was unveiled in Kathmandu on 13 June 2012. The book was jointly

unveiled by Mr. Barsa Man Pun, the minister for finance along with thefive former ministers for finance, former governor of Nepal Rastra Bank

(NRB) and president of society of economic journalists of Nepal (SEJON).The book is a collection of articles and speeches by Mr. President over

25 years of his career as an industrialist and a business leader.Addressing the book launching program, Finance Minister Barsa

Man Pun described Chaudhary as a multi-talented personality whohas played different roles and excelled on each of them. He assessed

that Chaudhary’s book has expressed a mix of hope anddisappointment regarding the country’s socio-economic status.

Former Finance Minister Prakash Chandra Lohani said that majorpolitical parties had no time to discuss on common economic agendas

that could have made the country prosperous. “Through this book,the writer has expressed grief on that account,” said Lohani.

On the occasion, Mr. President remarked that the book is acollection of his expression in terms of write-ups in various newspapers

and magazines as well as speeches at various formal and informalforums. “This book carries my emotions,” he said. Chairman of Nepal

Media Society Kailash Sirohiya, describing Chaudhary as a personalityof ‘multiple avatars, said: “His role as a leading industrialist, president

of Federation of Nepalese Chambers of Commerce and Industry (FNCCI)and Confederation of Nepalese Industries (CNI) and Constituent

Assembly (CA) member were commendable.”

Company Registration Ease for FDIThe government has eased the company

registration procedures to simplify and shorten

the approval of Foreign Direct Investment (FDI)in Nepal. For this the government has

eliminates at least seven steps in the FDIapproval process to create an investment-

friendly climate, according to the Office ofPrime Minister and Council of Ministers.

At a time when regular strikes, politicaland labour unrest have been hurting the

business confidence of the private sector, thegovernment has claimed that it is serious about improving the

investment climate in Nepal. “The licensing reform is one of theefforts of government in improving investment climate,” said joint

secretary of the Economic and Infrastructure Development Divisionof the Office of Prime Minister and Council of Ministers MahendraMan Gurung while addressing the ‘Doing Business Workshop’organized in May 16 to discuss on how investment climate could beimproved by reforming the laws to ease doing business.

According to Gurung, the government also planning to launch alicensing electronic portal by the end of this FY, which will be a one-stop-shop for all the licenses, permits, related laws and regulationsand necessary documents. The portal will serve as an informationhub for business people, and the government plans to make it moreinteractive in the future. Likewise, Inland Revenue Departmentunder Ministry of Finance and Office of the Company Registrar underMinistry of Industry, have signed a memorandum of understandingto share data and provide permanent account number (PAN) duringa company’s registration reducing a lot of paperwork and hasslesfor businesses and industries.

BRIEF

CNI and AEPC toWork Together

‘‘we agreed to work together to expand theAEPC and CNI-EDC’s services with the objectiveof enhancing the renewable energy access to

the employment generating industries.’’

E

CNI President Binod K Chaudhary & AEPC ED Dr. Govinda Pokharel exchanging the MOU,

secretary at MOE Krishana Gyawali & CNI Senior VP Narendra K Basnyat.

nergy Development Councilof the Confederation of

Nepalese Industries (CNI-EDC) and Alternative Energy

Promotion Centre (AEPC), Ministryof Environment, Government of

Nepal (GoN) sign a Memorandum ofUnderstanding (MoU) in

Kathmandu on June 12, 2012. TheMoU sets out the general terms and

principles of the institutionalcollaboration between the Parties

regarding implementation ofrenewable and alternative energy

technologies promotion interfacedwith poverty alleviation through

industrial growth at rural locationand environmental protection

activities. On the MoU, both partiesare agreed to guide, coordinate,

lobby and harmonize therelationship and work on a private

public partnership (PPP) modality

between CNI-EDC that represents

the private sector and AEPC thatrepresents the government.

AEPC is a semi autonomousgovernment institution mandated for

promotion and development ofrenewable energy technologies in

Nepal. "AEPC not only provides directfinancial and technical support in

terms of subsidy and capacity buildingsupport for managing renewable

energy systems at the communitylevel, it also encourages partnership

with the community basedorganizations, private sector, non-

governmental organizations andother institutions for maintaining

energy systems at affordable level,meeting basic quality standards, and

maximizing use of energy for incomegeneration activities," said Mr.

Krishna Gyawali, secretary atministry of Environment.

Addressing the signing

ceremony Binod Kumar Chaudhary,President of CNI said, "we agreed to

work together to expand the AEPC andCNI-EDC’s services with the objective

of enhancing the renewable energyaccess to the employment

generating industries to fostergrowth of industrial sector of the

country". The energy is one of the vitalinputs to livelihood and pre-

requisites for socio-economicdevelopment of Nepal. "Nepal’s rural

areas are far behind in using cleanerenergy sources, while modern forms

of energy such as grid power, fossilfuels, etc. have only limited access to

the rural areas of Nepal very oftenthese means are not affordable for

the poor communities," said Dr.Govinda Raj Pokhrel, executive

director of AEPC. "Thus the privatesector should come to the renewable

energy sources like solar, wind,

biogas, etc. and expansion of these

services to the poor households"Pokhrel added.

"Nevertheless, it has beenwidely recognized that expansion of

sustainable energy services to theindustries we can not foster

economic growth and reducepoverty," said Mr. Chaudhary. CNI is

a non-governmental, non-profit,corporate led and managed

organization that plays a proactiveand pivotal role in the country’s

private sector developmentprocess. "Considering the growing

need of modern form of energy andtechnology for industrial growth as

well as a potential growth sector forinvestment itself, CNI has given high

priority to the energy sector with theestablishment of a separate energy

development council," said Mr.Narendra Kumar Basnyat, senior

vice president of CNI.

Finance Minister Barsa Man Pun (Center) unveling the book with others.

May-June, 2012MONITOR 3Economy

he business community under the leadershipof Confederation of Nepalese Industries (CNI)

and Federation of Nepalese Chambers ofCommerce and Industry (FNCCI) organized a candle

light rally on May 23, 2012 for the peace and nationalharmony. The non-political, non-religious and non-

ethnic peace assembly was held at Kings RoadKathmandu. During the occasion, private sector

requested all political and non-political groups toshun violence and refrain from calling general

strikes while the country was caught by thecontinuous strikes organized by different political

and ethnic groups to secure their vested interest innew constitution.

CNI and FNCCI have joined hands with otherorganizations of different sectors, such as hotel,

education, media, health, human rights, I/NGOs,media and civil society for the event. “The assembly

is for peace, harmony and prosperity,” told Binod KChaudhary, president of the CNI, “We are neither in

the favor nor against any groups. We are againstthe culture of bandhas and violence.” Gently

condemning the random attacks on media personsand vehicles of different media houses during the

bandha by Nepal Federation of IndigenousNationalities (NEFIN), Chaudhary said, “We oppose

every kind of attack on business and media.”Bhaskar Raj Rajkarnikar, acting chairman of

FNCCI, said “This is our endeavor to preserve thenational harmony and establish peace in times of

nation-wide tension due to violence.” Bandha andviolent strikes will serve no one´s interest, rather

inflicted a huge loss to general public, wageearners as well as businesses said Rajkarnikar,

adding that “At this juncture, we don´t want tocalculate our business in numbers, this is the time

for national consensus and peace.”In the assembly, Nepal Chamber of

Commerce, Lalitpur Chamber of Commerce andIndustry, Bhaktapur Chamber of Commerce and

Industry, all the commodity associations,associate member organizations of CNI and FNCCI,

Nepal Federation of Cottage and Small Industries,Higher Secondary School´s Association Nepal,

human right organizations, engineers association,medical association, hotel associations and other

organizations working in the public and privatesector were also participated.

Private Sector’s Rally for

Peace and Harmony

T

The government of Nepal (GON) hasstepped up exercises to finalize a draft of

Safeguard, Anti-dumping andCountervailing Act, aiming to provide

protection to the local industries byimposing additional duty and quota

restrictions for imported items that aresold at unfairly cheaper rates in the local

markets. Though Nepal was liable tointroduce such laws before 2004 July as

per the commitment with World TradeOrganization (WTO), government apathy

and lack of pressure from businesscommunity delayed the process.

The finalization of the Act has beenrushed mainly as local manufacturers

complained that cheaper goods mainly fromneighboring China and India have flooded

the market unfairly and was threateningsome domestic industries. Once the Act

enforced the government will get the legalauthority to impose ´anti-dumping duty´ in

case the import price of a product remainedcheaper than its prices in the exporting

country. Similarly, the draft Act envisagesintroducing an additional ´countervailing

duty ́and ´safeguard measures ́that includesafeguard duty or quantitative restriction if

the dumped goods affected the domesticproducts, inflicting huge loss to the local

producers.“The draft act is essentially aimed

at protecting the local industries at atime when the dumped goods has been

eroding the competitive capacity of

CNI Women Entrepreneur and Professional Forum (CNI-WEPF) heldan interaction on access to finance and strengthening business

capacity for women entrepreneurs in Kathmandu on June 14, 2012.During the interaction woman entrepreneurs recommended banks

and financial institutions to take important initiatives to encouragewomen entrepreneurship by providing an easy access to finance.

The program was organized encourage woman entrepreneurs inNepal’s industrial and corporate sector. “The government along with

banks and financial institutions should enhance women’s access tofinancing,” said CNI- WEPF convener Ms. Barsha Shrestha. “Banks and

financial institutions do not discriminate against their clients on thebasis of gender. The only necessity is that legal, regulatory and policy

requirements for financing are fulfilled by the client,” she said. "The levelof initiative and inquires made by women regarding financing is very

low," said CNI president Mr. Binod Kumar Chaudhary, adding that thenumber of businesses registered in the names of women is relatively

higher. During the program, CNI senior vice president Mr. NarendraKumar Basnyat urged women entrepreneurs to come up with business

ideas so that banks and financial institutions can extend their supportto help them develop their business. “Women entrepreneurs should

be confident and competent to start a business,” he said.

Talk on Access to Finance To Safeguard Local Industriesdomestic products and safeguarding thelocal goods by restricting the import

quantity of competitor imported goods,”said a senior official at the MoCS. “We are

finalizing the draft after one round ofdiscussion with stakeholders and line

ministries within one month.” Goods thatare produced in the exporter countries

with subsidy are also to be restricted withadditional duty.

However, the act has provisioned thatno safeguard duty will be imposed if the

quantity of the dumped competitor goodsis less than three percent of the total

imports of such goods from a single leastdeveloped country. Similarly, safeguard

duty would not be imposed if the dumpedgoods imported from more than one least

developed country constitute less thannine percent of total imports of such

products to Nepal.Similarly, the government can execute

anti-dumping and countervailing duties forfive years each with provision to be

extended to ten years if it is deemsnecessary in case of growing threat to

domestic industry from dumped foreignproducts. “The duty for the dumped

products could be ascertained among thedumping margin, subsidy margin and loss

inflicted to the concerned domesticproducer whichever is lower,” said the

source.

(Published on 6 June 13, 2012, Republica)

WEPF convener Barsha Shrestha, CNI President Binod K Chaudhary & CNI Senior

VP Narendra K Basnyat among others.

May-June, 2012MONITOR 4International

Nepal Climbs Three Stepsin Doing Business

CNI on Vietnam

Business ForumCNI senior vice

president Mr. Narendra

Kumar Basnyat hasparticipated on the

working meeting ofVietnam Business Forum

(VBF) held at Hanoi, thecapital city of Vietnam, on

28 may to 1 June. Mr.Basnyat one of the

members of theNepalese delegation and

Nepal Business Forum (NBF), was participating onthe forum as a representative of Confederation of

Nepalese Industries (CNI), an apex body of thecountry's manufacturing and service sector.

NBF is the country's first national platform forpublic-private dialogue established to deliberate

on important investment climate issues andrecommend measures to improve it. Chaired by the

Rt. Honorable Prime Minister, NBF has 75 membersincluding senior government policymakers,

representative from the private sectors, civilsociety members, economists, academia and

several development partners.VBF held the forum to conduct meeting with the

delegation of Nepal and Papua New Guinea to sharethe experiences in the field of economic

development that Vietnam has gained through

public private partnership (PPP) model during post

war era. The delegation of both of the countries

Nepal and Papua New Guinea held separate

meetings with the different ministries,

departments and authorities of Vietnam as well as

with local business organizations.

The 14 member's Nepalese delegation was

headed by Mr. Uma Kanta Jha, secretary at

Ministry of Industry (MOI). The delegation was

consisting the representatives from Ministry of

Commerce and Supply (MOCS), Nepal Rastra Bank

(NRB), office of the prime minister and council of

ministers, Ministry of Finance (MOF), Federation

of Nepalese Chamber of Commerce and Industry

(FNCCI), Nepal Chamber of Commerce (NCC),

Independent power Producers' Association of

Nepal (IPPAN) and representatives from

International Finance Corporation (IFC), a world

bank group's Nepal office.

FICCI's Country Manager at CNI

T

F

Published by: Confederation of Nepalese Industries (CNI), Trade Tower, 5th Floor, Thapathali, Kathmandu, Editor: Hom Nath Gaire

Phone:+977-1-5111122, 5111123 Fax: +977-1-5111125, Post Box: 21056, Email: cni@wlink.com.np, Website: www.cnind.org

ederation of Indian Chamber of

Commerce and Industry (FICCI), theapex body of Indian business sector,

has appointed Mr Kanishka Dasgupta asthe country manager to Nepal at CNI. FICCI

has already signed MOU with theConfederation of Nepalese Industries

(CNI), the apex body of Nepalesemanufacturing and service sector, and set

its Nepal office in the premises of CNI. Mr.Dasgupta has formally started his work

since 1st June 2012 and he will be workingas a liaison officer for both of the

organizations. FICCI believed that the

appointment of its representative in Nepalwill play a pivotal role to further

strengthening the economic relations andcooperation between Nepal and the India

in general and the private sector of boththe countries in particular in the areas of

trade, investment and socio-economicdevelopment.

CNI is a non- government, not forprofit and non-political private sector

organization representing themanufacturing and service enterprises

of Nepal. In addition to FICCI, it is well

connected with suitable regional andglobal organizations such as the World

Economic Forum and the Confederationof Indian Industries (CII), Boao Forum for

Asia (BFA) etc. Established in 1927, FICCIis the largest and oldest apex business

organization in India. A non-government,not-for-profit organization, FICCI is the

voice of India’s business and industry.FICCI draws its membership from the

corporate sector, both private andpublic, including SMEs and MNCs.

he overall doing business environmentof Nepal in 2012 has been improving

marginally, shows the 'Doing Businessreport-2012' ---the World Bank publication.

According to the report, Nepal has beenranked 107th on ease of doing business out of

183 economies, where as the country's DoingBusiness ranking was 110th in 2011. The office

of the Prime Minister and Council of Ministers,Ministry of Industry (MOI) and Nepal Business

Forum (NBF) jointly reviewed the progress onNepal’s performance against World Bank’s

Doing Business indicators, published by WorldBank Group in a workshop held at Kathmandu

on May 16 2012.The annual Doing Business report ranks

countries in terms of ease of doing businessagainst the 10 major indicators defined by the

World Bank Group. Improvement in theranking due to reforms will help attract FDI

because prospective investors decide on thebasis of a country’s ranking in the Doing

Business report. The workshop also discussedon how to support the Investment Year 2012-

13 by reviewing reforms in four major areaslike Starting a Business, Dealing with

Construction Permits, Paying Taxes andTrading across Borders.

"The government would like to see howit can improve the country’s ranking in the

Doing Business report, said Mahendra ManGurung, joint secretary of the Economic and

Infrastructure Development Division of theOffice of Prime Minister and Council of

Ministers, adding that Nepal can create aninvestment friendly cl imate for both

domestic and foreign investors by improvingits ranking in the report. "Without the

private sector ’s involvement, rapideconomic growth that creates jobs and

economic opportunities cannot takeplace," he added.

International Finance Corporation (IFC)representative Shyamal Shrestha, on the

occasion, made a presentation on DoingBusiness 2012 and strategy for successful

reforms while joint secretary at the MOI AnilKumar Thakur lauded NBF’s initiative for

undertaking reforms. “Nepal is in a transitionphase and the government has not been able

to carry out reforms as anticipated but thescenario is encouraging,” he added.

Topic Rankings 2012 Rank 2011 Rank Change in Rank

Doing Business (Overall) 107 110 3

Starting a Business 100 9 5 -5

Dealing with Construction Works 140 161 21

Getting Electricity 9 9 102 3

Registering Property 2 4 2 3 -1

Getting Credit 6 7 6 4 -3

Protecting Investors 7 9 7 4 -5

Paying Taxes 8 6 9 0 4

Trading Across Boarder 162 161 -1

Enforcing Contracts 137 137 No change

Resolving Insolvency 112 113 1

Source: World Bank